Correlation Between Lohilo Foods and Mendus AB
Can any of the company-specific risk be diversified away by investing in both Lohilo Foods and Mendus AB at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lohilo Foods and Mendus AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lohilo Foods AB and Mendus AB, you can compare the effects of market volatilities on Lohilo Foods and Mendus AB and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Lohilo Foods with a short position of Mendus AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lohilo Foods and Mendus AB.
Diversification Opportunities for Lohilo Foods and Mendus AB
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lohilo and Mendus is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Lohilo Foods AB and Mendus AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mendus AB and Lohilo Foods is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Lohilo Foods AB are associated (or correlated) with Mendus AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mendus AB has no effect on the direction of Lohilo Foods i.e., Lohilo Foods and Mendus AB go up and down completely randomly.
Pair Corralation between Lohilo Foods and Mendus AB
Assuming the 90 days trading horizon Lohilo Foods AB is expected to under-perform the Mendus AB. In addition to that, Lohilo Foods is 1.03 times more volatile than Mendus AB. It trades about -0.09 of its total potential returns per unit of risk. Mendus AB is currently generating about 0.04 per unit of volatility. If you would invest 825.00 in Mendus AB on September 7, 2024 and sell it today you would earn a total of 45.00 from holding Mendus AB or generate 5.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Lohilo Foods AB vs. Mendus AB
Performance |
Timeline |
Lohilo Foods AB |
Mendus AB |
Lohilo Foods and Mendus AB Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lohilo Foods and Mendus AB
The main advantage of trading using opposite Lohilo Foods and Mendus AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lohilo Foods position performs unexpectedly, Mendus AB can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Mendus AB will offset losses from the drop in Mendus AB's long position.The idea behind Lohilo Foods AB and Mendus AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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